FISCAL DECENTRALIZATIO N MODULE: OUTLINE Roy Bahl Regents Professor of Economics, Emeritus Georgia...
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![Page 1: FISCAL DECENTRALIZATIO N MODULE: OUTLINE Roy Bahl Regents Professor of Economics, Emeritus Georgia State University September, 2015 Manila External Support.](https://reader036.fdocuments.us/reader036/viewer/2022082713/5697bfd91a28abf838caf73a/html5/thumbnails/1.jpg)
FISCAL DECENTRALIZATION MODULE: OUTLINE
Roy BahlRegents Professor of Economics, Emeritus
Georgia State University
September, 2015Manila
External Support for Decentralization Reforms & Local Governance Systems in the Asia Pacific:
Better Performance, Higher Impact?
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WHAT WE WILL TALK ABOUT• The Financing Side of the budget of SNGs• Own Source Revenues• Intergovernmental Transfers• Equalization• Performance Grants
• Focus on the Practice in Asia
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OWN SOURCE REVENUES OF SUBNATIONAL
GOVERNMENTSROY BAHL
REGENTS PROFESSOR OF ECONOMICS, EMERITUSGeorgia State University
September, 2015Manila
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THE BENEFITS OF SUBNATIONAL GOVERNMENT REVENUES• Increased Accountability and better services• Diversified Administration• Hard Budget Constraint• Borrowing potential (Repayment)• Increased Revenue
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THE DANGERS OF SUBNATIONAL GOVERNMENT REVENUES• Costly Tax Administration• Resource Misallocation• Regional Fiscal Disparities• Complicates Macroeconomic Policy• More Corruption?• Political Resistance
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PROPERTY AND LAND TAXES: ADVANTAGES• Significant Revenue Potential• Not Regressive• Can be a Benefit Tax• Can Have a Positive Effect on Land Use• The Devil We Know
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PROPERTY AND LAND TAXES: DANGERS• Revenue Potential is rarely realized• Administration is costly• Unpopular tax• Political Target• Visible• Judgmental assessment• Accrued wealth
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Costly Administration
• Five steps are required for good administration• Identification of the property• Keeping records complete and updated• Valuation and revaluation• Collection• Appeals
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WHY IS PROPERTY TAX REVENUE SO HARD TO RAISE?• TC/Y= (TC/TL) (TL/TXAV) (TXAV/TAV) (TAV/MV)
(MV/Y)
• TC = Tax collections• Y = GDP• TL = Tax liability• TXAV = Taxable assessed value• TAV = Total assessed value• MV = Market value
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HOW CAN THE PROPERTY TAX BE REFORMED?• Get all the pieces on the table (ID, Assess, collect)• Consolidate land transfer, value capture and
property tax• Reduce Intergovernmental Transfers• Introduce a local Sales Tax??• Newcomers: Start simple (area?)
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NON PROPERTY TAX REVENUES• Individual Income Tax• Payroll Taxes• Gross Receipts Tax• Selective Sales Taxes
• Services• Utilities
• Motor Vehicle Taxes• Motor Fuels, Licenses, Registration, Parking, Tolls
• Business Licenses• User Charges